In late November 2023, the National Assembly passed amendments to the Housing Law and the Real Estate Business Law, which will take effect from 2025. In the early days of 2024, the Land Law (amended) was also passed to complete the final piece of the legal framework for the real estate market. The real estate market has the basis to expect a more sustainable recovery.
More room for restructuring
Recently, 70% of the difficulties in the real estate market have been related to legal obstacles. The simultaneous passage of three laws and amendments to the Credit Institutions Law may be the final key points in the Government and the National Assembly’s efforts to find solutions to market bottlenecks.
The new laws passed help the real estate market to have more room for restructuring. Illustration: Le Vu
Mr. Le Viet Hai, Chairman of the Hoa Binh Construction Group, expressed: “The efforts of the Government and the National Assembly have solved the long-standing problems of businesses and can be the driving force for businesses to break out of the survival limit.”
Looking back at the period from late 2022 to the end of 2023, the stagnation of the real estate market has led the Government to continuously issue resolutions, directives, and many meetings to find support solutions. Localities and the Prime Minister’s Task Force have also actively worked to remove legal obstacles to many projects, thereby helping the market have positive changes and improving the supply source.
Along with the legal story, the market is also supported by many other policies such as Decree 08 on corporate bonds, Resolution 33 on real estate debt restructuring, widened credit room, the State Bank of Vietnam has reduced interest rates four times, a credit package of VND 120,000 billion for social housing… The result is that since the end of 2023, the real estate market has become more optimistic, aiming for a new and more sustainable cycle.
Mr. Hoang Hai, Director of the Housing and Real Estate Market Management Department (Ministry of Construction), affirmed that the amendments to the 2023 Housing Law and the 2023 Real Estate Business Law recently passed by the National Assembly will be a significant step forward in policy. One of the important legal frameworks is opened up with many provisions that have a positive impact on the market, investors, and customers. In which, the 2023 Housing Law has 7 new points that support the Social Housing Development Strategy while the 2023 Real Estate Business Law has 11 new points that are suitable for practice, ensuring the consistency and harmony of legal provisions.
Experts also unanimously appreciate the impacts of the laws that will positively affect the market. Dr. Pham Anh Khoi, Head of the Institute for Economic and Financial Real Estate Research (DXS FERI), said that amending the Land Law along with amending the Real Estate Business Law is a positive signal.
The amended Land Law will make it easier for investors to compensate for clearance, thereby increasing land prices according to the market price, which will benefit landowners. Applying land prices according to the market price also helps reduce difficulties for investors in the compensation process for projects, making it easier and faster to bring products to the market.
In terms of the market, Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the southern region, said that the Land Law will support and improve the supply of real estate in the coming time. Accordingly, land prices will increase but sustainably, as the Land Law promotes land pricing close to market prices and improves land use efficiency.
“The mechanism of pricing based on actual market conditions will help the land fund be deployed more quickly, and the supply of products will no longer be scarce like it is now. Therefore, investors will increase the supply from 2024,” Mr. Tuan predicted.
Experts from Batdongsan.com.vn also point out that many entities will benefit from the 2023 Land Law. Businesses will have better mechanisms, specific regulations to access land funds and develop projects. People affected by clearance will also enjoy better compensation regimes. Land access subjects will be expanded, with more flexible opportunities and more reasonable pricing mechanisms. Cases of land recovery are clearly specified in the land law and auction regulations are transparently and publicly disclosed.
If the real estate market went through a stagnant period in 2023, the story of 2024 was different. This is the year that creates more space for the market’s restructuring strategy, and the time it takes for policies to be implemented quickly or slowly depends on the extent to which businesses take action.
With the laws in place, what does the market need?
In 2024, the real estate market is expected to open a new chapter of positive recovery. Some real estate segments will have bright spots, such as social housing, which can meet the genuine needs of the people in the context of limited supply.
According to the provisions of the 2023 Housing Law, the provincial People’s Committees must allocate enough land funds for developing social housing according to the approved programs and plans for housing development at the provincial level. In special urban areas, type I, type II, and type III urban areas, based on the Government’s regulations, provincial People’s Committees decide that investors in commercial housing projects must allocate a part of the area for building social housing.
These regulations continue to support the goal of 1 million social houses set by the Government by 2030. In 2024 alone, despite many challenges, the Government has assigned targets for the whole country to complete 130,000 social housing units.
The market will have more room to restructure products in a sustainable, transparent, and substantial way. Illustration: Le Vu
In fact, many social housing projects have recently been approved for investment decisions and groundbreaking. In 2023 alone, 16 projects were licensed nationwide, and 28 projects were completed and put into use. The VND 120,000 billion credit package for this type of housing is also being pushed for disbursement, removing bottlenecks… to be put into reality soon.
Real estate businesses are also encouraged to restructure their products, focusing on genuine housing segments, social housing. In particular, businesses should focus on completing unfinished projects, especially social housing projects, workers’ housing, affordable housing segments to increase liquidity.
Experts expect that under the impact of the laws, the legal issues will be resolved, giving the real estate market more space to restructure products in a sustainable and substantial way. However, to put the laws into practice, the legal documents need to be completed as soon as possible in terms of specific guidance and wait for the laws to take effect.
In addition, besides the optimistic mindset, members of the market should not expect too much from the Land Law being passed to help the market recover quickly. Because it will take about 8-12 months for the law to be absorbed and enforced. From now until 2025, market participants will discuss and apply the legal provisions to optimize their life in the best way. Therefore, current businesses need to have appropriate calculations for matching products and sound financial health to enter a more sustainable development cycle.